Dividend.com: J&J a Good Play

Johnson Controls ( JCI) is forecasting a decline in revenue and earnings for its new fiscal year due to an anticipated drop in global automotive production.

The company manufactures original equipment for automobile manufacturers, including seats, interiors and batteries of various sizes.

For 2009, Johnson Controls now sees a profit of $1.95 to $2.10 per share, well below analysts' consensus estimates of $2.46 a share.

We have been avoiding the stock since our early June coverage began, when shares were trading at the $33 level. We are still very cautious about any auto-related stocks, even with rumors circling about more potential federal bailout money entering the sector. The industry recently received $25 billion in funding, and needs much more than that to stop the bleeding. We will watch the news flow carefully, but would avoid bottom fishing at this point. Johnson Controls has a dividend yield of 2.16%, based on last night's closing stock price of $24.00.

Johnson Controls is not recommended at this time, holding a Dividend.com Rating of 3.2 out of 5 stars.

Ingersoll Rand Lowers Earnings Forecast

Industrial giant Ingersoll Rand ( IR) is lowering its third-quarter earnings estimates as it sees weaker-than-expected revenue across its business segments.

The company cited a couple of factors, including weaker North American and Western European markets, which were particularly slower in September, as well the effects of the strong U.S. dollar.

The new guidance is for profit in the third quarter to be in a range of 98 cents to $1 per share, below its earlier estimate of $1.05 to $1.10 per share. It estimated full-year profit in a range of $3.35 to $3.55 per share. Analysts' estimates were at $1.05 for the quarter and $3.72 for the year.

We had removed IR shares from our "Recommended" list on Aug. 6 when shares were trading at $36.69. The shares are definitely getting more attractive now from a valuation standpoint. The company looks to be at fewer than eight times earnings, and its dividend yield is 3.09%, based on last night's closing stock price of $23.30. We will be watching the stock closely and will keep everyone posted if we make any ratings changes.

Ingersoll Rand is not recommended at this time, holding a Dividend.com Rating of 3.2 out of 5 stars.

Management raised its 2008 earnings forecast to $4.50 to $4.53 per share from its earlier outlook of $4.45 to $4.50 per share.

We reinitiated our "Recommendation" for the stock yesterday, as its dividend yield rose back to the 3% level. We felt that was a good point to get back into the shares, and 12 times 2008 earnings is not a bad entry point, either. We would not chase the shares into the high 60s, but would wait for the stock to pull back a bit before considering a position.

Johnson & Johnson is a "Recommended" dividend stock, holding a Dividend.com Rating of 3.5 out of 5 stars.

W.W. Grainger Bucks the Earnings Trend, Beats Estimates

Industrial supplier W.W. Grainger ( GWW) is giving investors some good earnings news this morning, with the company posting better than expected quarterly results.

The company reported net income of $140 million, or $1.79 a share, which was significantly better than the consensus estimates of $1.53 a share. The company cites the ability to raise prices, as well as new product lines and expansion for the impressive quarter.

W.W. Grainger now expects earnings of $6 to $6.20 a share, up from its prior view of $5.80 to $6.10 a share. Analysts had been expecting $5.88 a share. GWW shares are up nearly $16 in the last two trading sessions.

We would not chase shares of GWW here, but would like to see it pullback and stabilize before re-initiating a position. The company has a 1.74% dividend yield, based on last night's closing stock price of $80.45.

W.W. Grainger is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.

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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.

Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.